From Volume 37, Issue 32 of EIR Online, Published Aug. 20, 2010

U.S. Economic/Financial News

Homeless in Las Vegas: Just Call It 'Harryville'

Aug. 13 (EIRNS)—Senate Majority Leader Harry Reid's (D-Nev.) election campaign slogan is "Driving Nevada Forward." Forward to where, is not said, but perhaps it's underground, where CBS News reporter Seth Doane found hundreds of people living in Las Vegas. In a report aired on Aug. 10, Doane ventured into the flood-control tunnels under the Las Vegas Strip, where as many as 1,000 homeless people live. One person interviewed by Doane was a drug addict who has lived in the tunnels for eight years; others are much more recent victims of the economic collapse. Las Vegas is estimated to have 14,000 homeless people, up from nearly 12,000 two years ago, yet has fewer than 1,000 shelter beds.

RealtyTrac reported on Aug. 12, that Nevada has led the nation in home foreclosures for the 43rd month in a row, with 13,727 foreclosure filings in July, a 30% increase from the same time a year ago, and 7% more than in June. This is almost certainly a factor in the growth of homelessness in Las Vegas.

Teenagers Hit the Hardest by Job Losses

Aug. 14 (EIRNS)—A report issued last month by the Center for Labor Market Studies of Northeastern University, documents how hard the 16-19 age group has been hit by unemployment over the past ten years. Only 28.6% of teenagers were employed in June 2010, the first time that figure has fallen below 30% in the postwar period. In June 2007, it was 39.6%. The ratio of employed teenagers (out of the entire population of that age group) has been falling steadily since June 2000, when it was 51.4%.

Even more dramatic, is the degree to which teens have to compete against older workers for jobs, especially those over 55, who are staying in the workforce longer because their retirement options have disappeared. Employment ratios for workers over 55 have actually gone up over the last decade. In 2000, the report states, teens were more than twice as likely to have jobs as those 65-69 years old. Today, the older group is slightly more likely to be working than 16-19-year-olds, "an age reversal in employment outcomes never before seen in American history."

Fed Admits It Has Lost Control of the Crisis

Aug. 10 (EIRNS)—In the Federal Reserve's meeting today, where it escalated the hyperinflationary bailout, the bank basically admitted that it has lost control of the financial crisis. With Kansas City Fed President Thomas Hoenig dissenting, the Fed vowed to continue buying securities—reportedly, U.S. government debt—and reneged on its pledge to reduce its $1.4 trillion securities holdings—much of it mortgage-related toxic waste. The Fed will pour up to $200 billion into buying new assets, because "the pace of recovery in output and employment has slowed."

Hoenig, who had been the first of the Fed regional presidents to support reinstating Glass-Steagall, opposed the Fed's reversal of its stated policy that it would bring down the $1.4 trillion in assets holdings by $200 billion.

Another big bailout—with no need to ask the Congress or the American people—and another massive jump in hyperinflation.

AIG Bailout Aided Foreign Banks

Aug. 12 (EIRNS)—The Congressional Oversight Panel issued a report on Aug. 11, showing that billions of dollars in U.S. bailout funds wound up in big banks in Britain, Canada, Switzerland, France, Germany, and other nations. French and German banks were among the biggest beneficiaries of the U.S. rescue of American International Group, Inc. (AIG), yet the American government shouldered the entire $70 billion risk of pumping capital into AIG.

The report compares that with the $35 billion that France spent on its overall financial rescue program and the $133 billion that Germany spent. Much of the $182 billion in Federal aid to AIG—the biggest of the government bailouts—went to meet the company's obligations to its Wall Street trading partners on credit default swaps. The partners included French banks Société Générale, which received $11.9 billion in AIG money, BNP Paribas, which got $4.9 billion, and Germany's Deutsche Bank, $11.8 billion. Of the 87 banks and financial entities that indirectly benefitted from the U.S. aid to AIG, 43 are foreign, according to the report.

In addition to AIG, many of the U.S. banks and automakers that received billions in bailout aid derive a large proportion of their revenue from operations outside the U.S., the report noted.

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